Reviving the possibility of a US CBAM
By: Matthew Groch
According to the Yale Budget Lab, the average US effective tariff rate increased from 2.4% on 1 January t o 16.8% on 30 November, 2025, yet there does not appear to have been a single targeted strategy in imposing tariffs. Last year, the US threatened (1) Mexico with a 30% tariff due to drug and cartel trafficking?, (2) Brazil with a 50% tariff for unfair trade practices and a “witch hunt” against former President Jair Bolsonaro, and (3) India with a 50% tariff due to India’s purchases of Russian oil, despite the US having a trade surplus with both Brazil and India, which was the original rational for imposing tariffs. This year, the Administration has continued its threats. In January alone, President Trump threatened 100% tariffs on Canada and an additional 35% tariff on the European Union.
While tariffs have increased markedly the number of manufacturing jobs in the United States has declined steadily. US government data shows that the economy has shed 55,000 manufacturing jobs from January to November. The number of jobs in the manufacturing industry is at its lowest point since March 2022. As stated in The Economist in early 2026, “Nearly a year on, however, the Trumpian manufacturing renaissance is conspicuous by its absence. The manufacturing contraction is now entering its third year, and factories have continued to shed jobs. And it is not just that Mr Trump’s actions are failing to revive American manufacturing. Under the hood, there are signs that they are actively hurting it’.”
